Posts Tagged ‘Lending’
The foundation for the housing crisis was laid with the Community Reinvestment Act in 1977, where the government took it upon itself to encourage home ownership by pressuring banks to lend to lower-income buyers, often to meet arbitrary racial quotas. Obviously they haven’t learned a thing from where that got us.
Would it surprise anyone to learn that as a lawyer, Obama sued banks to force them to issue subprime loans? He also worked for ACORN, which specialized in using the Community Reinvestment Act to shake down banks and pressure them to loan money to low-income minorities or face “discrimination” charges.
According to the Washington Post, the Obama administration is pushing big banks to make more home loans available to Americans with bad credit – the same kind of government guidance that helped blow up the housing market:
In response, administration officials say they are working to get banks to lend to a wider range of borrowers by taking advantage of taxpayer-backed programs — including those offered by the Federal Housing Administration — that insure home loans against default.
Housing officials are urging the Justice Department to provide assurances to banks, which have become increasingly cautious, that they will not face legal or financial recriminations if they make loans to riskier borrowers who meet government standards but later default.
Think about this statement. The administration is asking banks – banks that Washington bails out; banks that Washington crafts regulations for — to embrace risky policies that put the institution and its investors (not to mention, all of us) in a precarious position. So precarious, in fact, that banks have to ask government if they can be freed of any legal or financial consequences.
What could possibly go wrong?
These types of government policies initially emerged the mid-1970s, when “progressive” Democrats in Congress began a campaign to help low-income minorities become homeowners. This led to the passage, in 1977, of theCommunity Reinvestment Act (CRA), a mandate for banks to make special efforts to seek out and lend to borrowers of meager means. Founded on the premise that government intervention is necessary to counteract the fundamentally racist and inequitable nature of American society and the free market, the CRA was eventually transformed from an outreach effort into a strict quota system by the Clinton administration. Under the new arrangement, if a bank failed to meet its quota for loans to low-income minorities, it ran the risk of getting a low CRA rating from the FDIC. This, in turn, could derail the bank’s efforts to expand, relocate, merge, etc. From a practical standpoint, then, banks had no recourse but to drastically lower their standards on down-payments and underwriting, and to approve many loans even to borrowers with weak credit credentials. As Hoover Institution Fellow Thomas Sowell explains, this led to “skyrocketing rates of mortgage delinquencies and defaults,” and the rest is history.
The CRA was by no means the only mechanism designed by government to impose lending quotas on financial institutions. For instance, the Department of Housing and Urban Development (HUD) developed rules encouraging lenders to dramatically hike their loan-approval rates for minority applicants and began bringing legal actions against mortgage bankers who failed to do so, regardless of the reason. This, too, caused lenders to lower their down-payment and income requirements.
Moreover, HUD pressured the government-sponsored enterprises Fannie Mae and Freddie Mac, the two largest sources of housing finance in the United States, to earmark a steeply rising number of their own loans for low-income borrowers. Many of these were subprime mortgages—loans characterized by higher interest rates and less favorable terms in order to compensate lenders for the high credit risk they were incurring.
Additional pressure toward this end was applied by community organizations like the pro-socialist ACORN. By accusing banks—however frivolously or unjustly—of having engaged in racially discriminatory lending practices that violated the mandates of the CRA, these groups commonly sued banks toprevent them from expanding or merging as they wished. Barack Obama, ACORN’s staunch ally, was strongly in favor of this practice. Indeed, in a 1994 class-action lawsuit against Citibank, Obama represented ACORN in demanding more favorable terms for subprime homebuyer mortgages. After four years of being dragged through the mud, a beleaguered Citibank—anxious to put an end to the incessant smears (charging racism) that Obama and his fellow litigators were hurling in its direction (to say nothing of its mounting legal bills)—agreed to settle the case.
Forbes magazine puts it bluntly: “Obama has been a staunch supporter of the CRA throughout his public life.” In other words, he has long advocated the very policies that already have reduced the real-estate market to rubble. And now he is actively pushing those very same practices again.
Tyler Durden at Zero Hedge calls it “The Scariest Chart Of The Quarter“:
We have already discussed the student loan bubble, and its popping previously, most extensively in this article. Today, we get the Q3 consumer credit breakdown update courtesy of the NY Fed’s quarterly credit breakdown. And it is quite ghastly. As of September 30, Federal (not total, just Federal) rose to a gargantuan $956 billion, an increase of $42 billion in the quarter – the biggest quarterly update since 2006.
But this is no surprise to anyone who read our latest piece on the topic. What also shouldn’t be a surprise, at least to our readers who read about it here first, but what will stun the general public are the two charts below, the first of which shows the amount of 90+ day student loan delinquencies, and the second shows the amount of newly delinquent 30+ day student loan balances. The charts speak for themselves.
[...] We’ll let readers calculate on their own what a surge in 90+ day delinquency from 9% to 11% (or as footnote 2 explains: 22%) in one quarter on $1 trillion in student debt means. For those confused, read all about it in this September article: “The Next Subprime Crisis Is Here: Over $120 Billion In Federal Student Loans In Default” which predicted just this.
Easy credit and the push to send an ever-increasing number of young people to college have combined to create what University of Tennessee law professor Glenn Reynolds has termed the “higher education bubble.” College has become much more expensive, but barely 60 percent of enrollees complete a four-year degree within six years. The other 40 percent are left with no degree, and plenty of debt.
For obvious reasons, loan burden falls almost exclusively on youth. Almost 40 percent of loans belong to people younger than 30, an age category hit hard by the current economic stagnation. That’s still no reason to stick taxpayers — many of whom don’t have college degrees — with the bill for graduates.
By removing the sliver of budgetary discipline that comes from holding individuals responsible for paying off debt, loan forgiveness encourages bad decisions. It also fosters the expectation of a “free” college education — with free meaning taxpayers foot the bill. The better solution is to cut off taxpayer-subsidized credit to universities. This would force institutions of higher learning to provide students an education that is actually valuable, not merely a credential.
The 1977 “Community Reinvestment Act” laid the groundwork for racial bias in lending. Banks were forced to fulfill racial quotas - even if that meant relaxing lending standards – or face fines and shake-down campaigns from the likes of ACORN activists.
Now Obama is expanding racial bias to nearly every industry:
If your organization has a policy or practice that doesn’t benefit minorities equally, watch out: The Obama administration could sue you for racial discrimination under a dubious legal theory that many argue is unconstitutional.
President Obama intends to close “persistent gaps” between whites and minorities in everything from credit scores and homeownership to test scores and graduation rates.
His remedy — short of new affirmative-action legislation — is to sue financial companies, schools and employers based on “disparate impact” complaints — a stealthy way to achieve racial preferences, opposed 2 to 1 by Americans.
Under this broad interpretation of civil-rights law, virtually any organization can be held liable for race bias if it maintains a policy that negatively impacts one racial group more than another — even if it has no racist motive and applies the policy evenly across all groups.
Obama has a long history of punishing producers in his quest for minority justice.
State Sen. Barack Obama and his radical mentor and friend Fr. Michael Pfleger led a protest against the payday loan industry demanding the State of Illinois to regulate loan businesses back in January 2000. (NBC 5 Week of January 3, 2000)
In his next term Obama is going back to his roots as a community organizer.
This is what happens when government interferes in the marketplace and tries to pick winners and losers:
FORTUNE — Do we need to worry about Too Small to Survive?
Now that President Obama has been re-elected, analysts, consultants and dealmakers have turned from whether Dodd-Frank will be repealed to what it means for banks now that it’s likely here to stay. The overwhelming conclusion: Thousands of small banks will soon disappear.
More lost jobs, more individuals and small businesses struggling to get quality service from a “too big to fail” bank that knows it will be bailed out no matter what crappy decisions they make.
Obama: Banks Are In It To Make Money And That’s Why We Need To Regulate Them
View on YouTube
Whenever Obama goes off teleprompter, it’s only a matter of time before his Marxist roots start to show. He just can’t help himself:
“Look, these financial institutions are in to make money and that’s why we need some smart regulations and this is an example of the difference in this campaign because my opponent says he wants to roll back all those [Dodd-Frank] regulations.”
Obama is right in this regard; this worldview is an example of the difference between his campaign and Romney’s. The Massachusetts Governor does not believe making a profit is a bad thing government needs to regulate.
Further, what Obama does not understand is that such regulations — like Dodd-Frank — have actually hurt small and community banks that do not have the resources of the larger financial institutions to deal with the burdens such laws impose.
One of the biggest drivers of the financial crisis was the federal government creating artificial, politically-driven incentives that moved these financial institutions to even make these “reckless bets.” Finance isn’t blameless, but how is more government involvement and control a desirable idea?
[...] Firstly, the president has yet to sufficiently explain why a large, entrenched bureaucracy seeking political gain through fiat is somehow nobler than a private, productive business seeking monetary profit by meeting consumers’ choices. As Ammon Simon writes for Forbes, Dodd-Frank is the very definition of tyranny. Secondly, Mitt Romney and Paul Ryan are not financial anarchists, but yes, they do want to roll back these new economy-damaging, job-killing, small-bank-sinking regulations still being written that are protecting large institutions “too big to fail” status rather than mitigating it.
This is socialism in its purest form, but most Americans don’t recognize it because they have never experienced it and you can be sure that our liberally run education system would not teach it as such. Instead, they disguise it as being pro-poor people and teach our children that successful business people are the real villains of our land.
Others who have come here from other countries who have lived under socialist rule readily see what Obama is doing and try to warn us about letting him turn us into another failed socialist country. Many have come here to escape socialism and are now living with the fear that America will become like the countries they left.
Obama believes that businesses shouldn’t be in it to make money. If you take away the profit motive, and why would anybody work?
It is any wonder his policies have hurt so many businesses and jobs, while swelling the numbers on welfare and food stamps?
We can’t afford 4 more years of this!
Rachel Alexander has an excellent piece at Townhall breaking down exactly how government meddling in the housing market caused the bubble and bust that ended up costing many Americans everything they had:
The epidemic of home foreclosures has been made far worse than necessary due to the banks’ unwillingness to work with homeowners. Although Congress has passed numerous laws to force the banks to assist homeowners, the banks have found ways not to comply. The banks also brazenly break other laws to further their profits at the expense of homeowners, most recently by falsifying interest rates in theLIBOR scandal.
Regular middle class Americans everywhere have unjustly lost their homes to foreclosure. They ended up in homes they could not sell due to the Federal Reserve Board, not their own actions. The Fed manipulates interest rates in order to grow or shrink the economy. It kept rates artificially low several years ago for a lengthy period of time. At the same time, Congress relaxed the laws on lending. The Obama administrationordered banks to lend to risky borrowers or face lawsuits. Many people with poor credit bought homes who were clearly risky borrowers. A large number were issued subprime loans they could not afford, ensuring their default.
Once the defaults began in 2007, the abandoned homes flooded the housing market, driving down home values for everyone. This left most homeowners unable to sell their homes, since most homeowners have a sizable mortgage. Someone who bought a home with a mortgage for $200,000 saw the value of their home dip to as low as half of that. Upside down, there is no way for someone to sell their home without owing the bank a considerable amount.
As people began losing their jobs due to the recession, they could not downsize to a smaller house or apartment because of being upside down on their mortgages. Many tried to short sale their homes, in the hopes of walking away without owing anything. In order to force the banks to accept a short sale, homeowners had to play chicken and stop paying their mortgages. Other homeowners stopped paying their mortgages in hopes of getting a loan modification, relying upon laws that were passed requiring banks to work with homeowners on loan modifications.
Very few of these homeowners were able to save their homes from foreclosure. The banks routinely turned down their requests for loan modifications, for trumped-up excuses like not turning in enough information or ironically missing mortgage payments, a catch-22. The banks turned down their short sale offers, for equally invalid excuses like claiming perfectly reasonable offers were not a good deal, or losing their paperwork. Finally, when some homeowners began to see their home values bounce back this year, allowing them to sell, the banks would not give them a payoff amount but went ahead with foreclosure.
Under Obama’s Homeowner and Stability Plan of 2009, the banks were given bonuses for each loan modification they implemented; $1,000 to the bank and $1,500 to the servicer. The banks put some homeowners in temporary “trial” loan modifications, collected the bonuses, then ultimately rejected the homeowners from permanent modifications and foreclosed on their homes. Half of the homeowners who entered the program were booted out. It soon became apparent that the program had been implemented to stave off foreclosures until after the 2010 election. Treasury Secretary Timothy Geithner, architect of the 2009 Troubled Asset Relief Program, TARP, cruelly referred to the program as homeowners “foaming the runway” for the distressed banks looking for a safe landing. Neil Barofsky, former special inspector for TARP, has written a book exposing the fraud, entitled “Bailout: An Inside Account of How Washington Abandoned Main Street While Rescuing Wall Street.” Barofsky is a Democrat and contributor to Obama, but was so appalled by what he encountered that he went public with the scandal.
Of the $46 billion in federal aid directed to distressed homeowners under TARP, only 10 percent has been distributed. One of the programs, which allocates $2.7 in TARP funds to encourage lenders to write down or eliminate second liens when refinancing, has not helped a single homeowner.
Housing Crisis Redux: ‘Community Reinvestment Act’ that caused mortgage crisis is back, as if 2008 never happened
The original housing bubble and subsequent mortgage meltdown began with the “Community Reinvestment Act” of 1977, which ACORN and politicians used to force banks to lend to low-income and minority applicants who were bad credit risks – all in the name of “compassion” and helping more people realize the “American dream of home ownership” before they were financially able. Government meddling created this crisis, and MORE government meddling under Obama has exacerbated the problem.
Now, they’re determined to repeat the mistake that cost the average American up to 40% of their net worth, much of it from their home value.
Do you remember that thing about how the banks wouldn’t lend to blacks and Hispanics because they were racists? And do you remember how they passed the Community Reinvestment Act so that banks were forced to reduce down payments practically to zero and lend to a lot of people they knew were bad credit risks? And do you remember how Wall Street bundled all these risky subprime mortgages and sold them to investors around the world so that when it became clear that those people weren’t going to be able to pay their mortgages banks everywhere were left holding the bag and all five of the Wall Street investment houses either went under or had to be bailed out by the federal government?
And do you remember how, when it was all over, liberals said it was actually the banks’ fault for “deceiving” all those people into thinking they could afford to buy homes and that the banks should be punished for it and some of those people be allowed to keep their homes anyway? And do you remember how all this cost the government close to a trillion dollars and put the whole economy in a hole that we really haven’t begun to dig ourselves out of yet?
Well, get ready because the whole thing is about to happen again.
Yes, believe it or not, the federal government is now startinganother initiative to force banks to lend to low-credit-rated blacks and Hispanics — not just anybody but specifically blacks and Hispanics — and is threatening — and already imposing — huge punitive fines if they don’t. Moreover, this time they’re going even further. They’re going to take over the credit rating agenciesand force them to change their standards to accommodate blacks and Hispanics so that nobody will have any idea who is a bad credit risk and who is not. In so many words, the government is about impose its will on the whole home-lending market and force another round of bad loans so that the banks are going to be looted once again so that even the federal government may not be able to bail them out this time.
The principle instrument this time is not the Justice Department, Fannie Mae and Freddie Mac, as it was last time, but the brand-new Consumer Finance Protection Bureau, designed by good old Elizabeth “Nobody-Ever-Made-It-On-Their-Own” Warren, which should really be called the Bureau for Bringing Down the Entire Economy. As reported in last Sunday’s New York Post by Hoover Institution Media Fellow Paul Sperry, the CFPB has just announced that it is adopting a 20-page “Policy Statement on Discrimination in Lending” issues by the Interagency Task force on Fair Lending in 1994 that kicked off Attorney General Janet Reno’s draconic enforcement of the Community Renewal Act. Part of the policy statement reads, “Applying different lending standards or offering different levels of assistance to applicants who are members of a protected [i.e., minority] class is permissible in some circumstances. Providing different treatment to applicants to address past discrimination would be permissible if done in response to a court order.” There are already plenty of court orders sitting around.
Just two weeks ago Wells Fargo caved to a Justice Department offensive and paid $175 million for alleged past discriminating against minority borrowers. All this occurred even though the bank received an “outstanding” grade in its most recent Community Reinvestment Act exam. The government did not even bother to prove discrimination in a single instance but relied instead on statistics showing lower rates of homeownership in minority neighborhoods. Thomas Perez, the Justice Department honcho who is spearheading this campaign, says banks discriminate “with a smile” and “fine print” and are “every bit as destructive as the cross burned in a neighborhood.” Nice objective evaluation there.
As in most such cases, Wells Fargo chickened out about going to court and refused to admit any wrongdoing but agreed to all kinds of diversity training and sensitivity counseling. The bank will have to “prominently display” a notice informing minority customers that they cannot be turned down for loans just because they are receiving public assistance such as unemployment benefits, welfare payments or food stamps. (Maybe they can even use food stamps for the down payment.) Wells Fargo must provide minority customers $50 million for down-payment and closing-cost assistance, including “Borrower Assistance Grants” of up to $15,000 per individual. It was also ordered to pay $125 million to as yet unnamed victims of previous discrimination. But get this! If those past victims don’t show up, the money must be handed over to community organizing groups. President Obama, you have a job waiting for you if you lose office this fall.
The Romney camp needs to shout these points from the rooftops. The average American who is too busy working and raising a family to pay close attention to politics is likely unaware of the depth of Obama’s scandalous cronyism, and they deserve to know!
President Obama’s record of rewarding political donors with taxpayer dollars and plum administration posts is facing a new round of scrutiny thanks to GOP challenger Mitt Romney’s effort to make it a central issue of the campaign.
“[President Obama] thinks it’s his right to give taxpayer money to those who have supported him financially,” former Gov. John Sununu (R., N.H.) said Tuesday on a conference call hosted by the Romney campaign. “It’s insulting to hard-working entrepreneurs who really do create jobs.”
The most publicized instance of so-called “crony capitalism”—investing taxpayer dollars in firms tied to political donors—is the failed solar panel company Solyndra. The Fremont, Calif., firm was the first to receive a taxpayer-backed loan guarantee from the Department of Energy (DOE) in September 2009, worth more than $530 million. The funding for the loan was allocated in the controversial stimulus package passed earlier that year.
Obama bundler George Kaiser was a major stakeholder in Solyndra through his Kaiser Family Foundation, and made several trips to the White House in March 2009 to meet with senior administration officials. In July 2009, Kaiser bragged about securing face time with “all the key players in the West Wing of the White House,” as well as his “almost unique advantage” when it came to steering taxpayer funds toward his pet causes.
“There’s never been more money shoved out of the government’s door in world history, and probably never will be again, than in the last few months and in the next 18 months,” Kaiser told members of the Tulsa Rotary Club. “And our selfish parochial goal is to get as much as it for Tulsa and Oklahoma as we possibly can.”
Although things did not pan out for Solyndra—the company filed for bankruptcy in September 2011—Kaiser can expect to see a better return on his investment than American taxpayers. As part of an agreement to restructure Solyndra’s loan agreement in 2010, Obama’s DOE granted priority status to private investors like Kaiser with respect to the first $75 million recovered in the event of the firm’s bankruptcy, a move that many suspect violated federal law.
Taxpayers, meanwhile, are unlikely to recover much of the money invested on their behalf.
H/T Weasel Zippers
When government steps outside of its legitimate, scriptural role of enforcing the rule of law and protecting unalienable rights – including private property rights – and grabs power to meddle in things outside its jurisdiction (such as the mortgage market), tyranny is inevitably the result.
The Wall Street Journal had a front-page article entitled “Cities Consider Seizing Mortgages” just two days ago.
The information in the article allows us to derive a formula that tells us how Emperor Obama and imperial functionaries plan to convert private property and rearrange capital markets for the “public good.”
San Bernadino County officials — together with the venture capital firm Mortgage Resolution Partners (MRP) and particular investment banks — are looking for California judges who are willing to join with them in order to steal private property for the purpose of self-enrichment and, of course, for the purpose of advancing the public good.
The thieves’ tool is eminent domain. A key player is Mr. Roger Altman, who “served in the Clinton administration and is raising funds for President Obama’s re-election effort.”
According to the article, Mr. Altman’s investment bank, Evercore Partners, together with the investment bank Westwood Capital, has been retained by MRP for the purpose of raising funds from private investors. The goal is to channel those funds to cities that will then seize, via the gavels of judges, certain underwater mortgage bonds currently held by firms who seem not to be as selfless as our valiant protagonists.
Just call it a novel play in what might be a burgeoning “post-securitization” market.
You see, San Bernadino County, and many other areas, have high percentages of homeowners saddled with underwater mortgages.
The poor homeowners — so loaded with debt that they don’t buy enough things! And think of what more foreclosures would do to home prices! In turn, what would that do to property tax revenues?
But wait — the proposed program is geared only toward a certain segment of the mortgage bond market:
… [u]nlike the beneficiaries of most recent mortgage-modification efforts, who must show hardship, these borrowers would have to be current on their payments to participate. And the program initially would focus only on mortgage-backed securities that aren’t federally guaranteed — about 10% of all outstanding U.S. mortgages.
So, there’s clearly a very “big problem,” and obviously government must fix it. But they can’t do it alone — they need an assist from “private” capital.
The preceding quote shows that the “big problem” is that there’s a chunk of homeowners who have, for whatever reason or reasons, decided not to walk away from underwater mortgages. Since they’re also current on their payments, there is every reason to believe that they’re pretty good credit risks — which, statistically speaking, probably has something to do with why they aren’t eligible for Mr. Obama’s mortgage modification programs.
The problem is now obvious to anyone who’s given any thought to how things should work. The problem is: how can one steal (sorry, it’s not stealing — it’s eminent domain) reliable debt instruments from presumptively honest investors, thereby safeguarding the public interest, while somehow managing to enrich oneself in the process?
Enter our protagonists. Wouldn’t it be terrific for everyone involved if cities could successfully petition courts to seize reliable mortgage bonds at 80 cents on the dollar? Then, one could split the difference in part by arranging reduction (through the Federal Housing Administration) of the mortgage principal (thereby creating equity out of nothing on behalf of certain homeowners so that they can buy more things and better avoid foreclosure). What’s left over can be divided among cities, MRP, and its investors!
That’s the plan. All that’s needed are public-spirited courts.
What does the Left care how much taxpayer money he loses on these “investments”? They’re gambling with other people’s money!
Another stimulus-backed solar panel maker, one the president touted in a weekly radio address, is filing for bankruptcy. The administration’s green-energy efforts continue to grow a deeper shade of red.
After receiving some $70 million in federal loans, Abound Solar, a Colorado-based firm that was developing thin-film solar panels, has announced it will follow an earlier Obama administration green energy failure, Solyndra, into bankruptcy.
Like Solyndra, Abound’s bankruptcy is a bitter echo of the hype generated by President Obama in his weekly radio address exactly two years ago when he touted his push for a clean energy economy. Abound Solar, he said, would manufacture advanced solar panels at two new plants, creating more than 2,000 construction jobs and 1,500 permanent jobs at plants in Indiana and Colorado.
Abound apparently wasn’t even helped by last July’s $9.2 million Export-Import Bank loan to support exports of thin-film solar photovoltaic modules to Punj Lloyd Solar Power Ltd., a company in India building a 5-megawatt solar project located on a 62.5-acre site near the village of Bap.
Three years ago, when Obama’s Department of Energy started approving roughly $16 billion in federal loan guarantees for solar energy companies, the DOE agreed to put taxpayers’ money behind startups that were working on ways to make solar panels cheaper. Two, Solyndra and Abound, have now gone belly-up.
The other two solar manufacturing companies with loan guarantees, SoloPower and 1366 Rechnologies, have not actually borrowed any taxpayer money so far. This is probably a good thing as solar energy’s promise is eclipsed by a real energy boom in oil and natural gas from shale. It is also fortunate for taxpayers that Abound drew only $70 million out of a $400 million line of credit.
In a January report, Sheryl Attkisson of CBS News counted at least 12 clean-energy companies that were having trouble after collectively being approved for more than $6.5 billion in federal assistance. Five had filed for bankruptcy: the junk bond-rated Beacon Power, Evergreen Solar, SpectraWatt, AES subsidiary Eastern Energy and the now-infamous Solyndra. Now we have a sixth — Abound Solar.
The French and Greeks aren’t willing to face the reality that their welfare states are bankrupt, and have instead voted themselves socialist leaders who told them what their tickling ears wanted to hear. They deserve what they get.
Unfortunately, when it all hits the fan, they’re going to be taking most of Europe and the world’s economy down with them.
Greek voters on Sunday (6 May) punished the two ruling parties responsible for the last EU bail-out and its austerity measures by giving the radical left the second highest number of votes and allowing a neo-Nazi party into the legislature for the first time.
Early official results after 10 percent of the votes were count show that the centre-right New Democracy party has gained the most votes (19.2%) but it is not enough to re-make the current ruling coalition with the Social Democrats (Pasok).
Instead, Syriza, a coalition of radical left parties (16.3%) opposing the austerity rules of the €130 billion bail-out, but in favour for Greece to stay in the eurozone, pushed Pasok into third place.
Socialist Francois Hollande defeated conservative incumbent Nicolas Sarkozy on Sunday to become France’s next president, heralding a change in how Europe tackles its debt crisis and how France flexes its military and diplomatic muscle around the world.
Sarkozy conceded defeat minutes after the polls closed, saying he had called Hollande to wish him “good luck” as the country’s new leader.
Exuberant crowds filled the Place de la Bastille, the iconic plaza of the French Revolution, to celebrate Hollande’s victory. He will be France’s first leftist chief of state since Francois Mitterrand was president from 1981 to 1995.
Sarkozy thanked his supporters and said he did his best to win a second term, despite widespread anger at his handling of the economy.
“I take responsibility … for the defeat,” he said.
Hollande’s former partner and mother of his four children, Segolene Royal, said she has a “feeling of profound joy to see millions and millions of French renew the tie to the left.”
Here we go again!
The Energy Department said Thursday it expects to begin tentatively approving new taxpayer-backed loans for renewable energy projects in the coming months.
The announcement comes about seven months after Solyndra, the California solar firm that received a $535 million loan guarantee from the administration in 2009, went bankrupt, setting off a firestorm in Washington.
The list of solar companies that have ALREADY gone belly-up, taking billions in taxpayer money with them, is already lengthy:
This is just the short list of energy companiesbacked by President Barack Obama that have failed. President Obama has wasted tax payer money on these companies and he wants you to re-elect him so he can give you more of the same.
Being the ideologue that he is, he WONT back down from funding more fake (meaning they have never proven themselves profitable or actually have made a product that works)
Can the United States of America REALLY afford FOUR MORE YEARS of this president?
List Of Failed Green Energy Jobs – By Obama
- Solar Trust of America: FAIL
- Bright Source: FAIL
- Solyndra: FAIL
- LSP Energy: FAIL
- Energy Conversion Devices: FAIL
- Abound Solar: FAIL
- SunPower: FAIL
- Beacon Power: FAIL
- Ecotality: FAIL
- A123 Solar: FAIL
- UniSolar: FAIL
- Azure Dynamics: FAIL
- Evergreen Solar: FAIL
- Ener1: FAIL
The Daily Caller reports that the DOE funded these loans even though the firms had ‘junk bond’ ratings:
The U.S. Department of Energy backed hundreds of millions of dollars in loans for discredited solar power start-ups whose corporate debt was already sullied with “junk” ratings by Standard & Poor’s and Fitch Ratings, two of the world’s leading credit agencies, a federal government investigation has shown.
Despite the finding, Energy Secretary Steven Chu vigorously defended the ethics of his agency in a hearing last week held by House Oversight Committee Chairman Rep. Darrell Issa.
Details are emerging this week about the Energy Department’s practices that indicate the agency spent a disproportionate amount of funding on these tainted solar power projects.
Some people just can’t accept reality and refuse to learn. If only their stupidity affected just their OWN money instead of MINE!
Here we go again!
“Like all booms, higher education has been fueled by credit.”
Conversely, easy, cheap credit fools entrepreneurs into believing that society’s collective time preference has fallen, enticing them into investing in higher-order goods, such as land, factories, and the like — when in fact the collective time preference hasn’t changed, and the demand for higher-order goods is merely a mirage. The result is booms and busts rather than genuine growth.
College degrees are similar to what the Austrians call higher-order goods. It’s thought that a student will gain knowledge and seasoning in college that will make him or her more productive and a candidate for a high-paying career. The investment of time and money in knowledge pays through higher productivity and is translated into higher income. Higher education is the higher-order means to a successful career.
PayPal founder and early Facebook investor Peter Thiel, questioning the value of higher education, tells TechCrunch,
A true bubble is when something is overvalued and intensely believed. Education may be the only thing people still believe in in the United States. To question education is really dangerous. It is the absolute taboo. It’s like telling the world there’s no Santa Claus.
The excesses of both college and homeownership were always excused by a core national belief that, no matter what happens in the world, these were the best investments you could make. Housing prices would always go up, and you will always make more money if you are college educated.
The New York Times‘ David Leonhardt even claims,
Construction workers, police officers, plumbers, retail salespeople and secretaries, among others, make significantly more with a degree than without one. Why? Education helps people do higher-skilled work, get jobs with better-paying companies or open their own businesses.
Using data from the Center on Education and the Workforce at Georgetown University, Leonhardt asserts that dishwashers with college degrees make $34,000 a year while those without make $19,000.
No employer in their right mind would pay nearly double for a dishwasher with a college degree. However, there are plenty of fresh college graduates cobbling together multiple low-level jobs just to make ends meet.
“More college graduates are working in second jobs that don’t require college degrees,” writes Hannah Seligson in the New York Times, “part of a phenomenon called ‘mal-employment.’ In short, many baby-sitters, sales clerks, telemarketers and bartenders are overqualified for their jobs.”
Nearly 2 million college graduates were mal-employed last year, up 17 percent from 2007. Nearly half of all college graduates are working at a job not requiring a degree.
In the United States, 80,000 bartenders as well as 317,000 waiters and waitresses have college degrees. Nearly a quarter of all retail salespersons have a college degree. In all, 17 million Americans with college degrees are working at jobs that do not require a bachelor’s degree.
“Young college graduates working multiple jobs is a natural consequence of a bad labor market and having, on average, $20,000 worth of student loans to pay off,” said Carl E. Van Horn, director of the John J. Heldrich Center for Workforce Development at Rutgers.
“The median starting salary for those who graduated from four-year degree programs in 2009 and 2010 was $27,000, down from $30,000 for those who graduated in 2006 to 2008, before the recession,” Seligson writes, adding, “Try living on $27,000 a year — before taxes — in a city like New York, Washington or Chicago.”
Like all booms, higher education has been fueled by credit. In June of last year, total student-loan debt exceeded total credit-card debt outstanding for the first time, totaling more than $900 billion.“Not only are the returns poor, but the quality of the product is poor.”
All of this credit has pushed the average cost of tuition up 440 percent in the last 25 years, more than four times the rate of inflation. But while the factors of production on campus have been bid up, just as they are in any other asset boom, the return on investment is a bust. In 1992, there were 5.1 million mal-employed college graduates. By 2008, the number was 17 million.
Not only are the returns poor, but the quality of the product is poor (as in the case of new-construction quality in the housing boom). According to the authors of Academically Adrift: Limited Learning on College Campuses, 45 percent of students make no gains in their critical reasoning and thinking skills, as well as writing ability, after two years in college. More than one out of three college seniors were no better at writing and thinking than they were when they first arrived at their campuses.
Many projects contemplated and started during the real-estate boom are never completed, as prices are bid up, and owners run out of capital. Such is the case for many attending college, as over 45 percent of those who enroll as freshmen ultimately give up, realizing they lack the disciplinary and mental capital, and do not graduate.
Similar to the government push for increased homeownership, government is foursquare behind having more young people attend universities. One of President Obama’s top goals is to increase the number of Americans attending college.
But why? “Among the members of the class of 2010, just 56 percent had held at least one job by this spring, when the survey was conducted,” reported the Times recently. “That compares with 90 percent of graduates from the classes of 2006 and 2007.”
And because they can’t find jobs, 85 percent of college grads move back in with their parents after they graduate. According to a poll by Twentysomething Inc., a marketing and research firm based in Philadelphia, that rate has steadily risen from 67 percent in 2006.
These are the same kinds of regulations, created by the “Community Reinvestment Act” of 1977, that led to the housing bubble and mortgage crisis. The idea is to force banks to make loans to minority and low income applicants – most of whom CAN’T AFFORD TO PAY IT BACK! If they don’t meet their quotas, banks are charged with “discrimination” and face heavy penalties.
Obama is not only forcing banks to lower their lending standards and transferring risk to the taxpayers…he’s going around congress again, unilaterally dictating by fiat. The president’s job isn’t to make or change laws – that’s the job of congress.
Wth no authorization from Congress, President Barack Obama has announced that his administration–through the Federal Housing Administration–will insure refinanced mortgages for 2 to 3 million borrowers without verifying their income or even if they hold a job, according to the Department of Housing and Urban Development (HUD).
Obama announced his latest mortgage program at a White House news conference on Tuesday.
Any American with a mortgage insured by the Federal Housing Administration (FHA) endorsed on or before May 31, 2009 and who is current with their mortgage payments would qualify, according to HUD.
No additional underwriting, or examining the verification of income, employment status or creditworthiness, will be done.
More hard-earned taxpayer money flushed down the “green” drain. Hey Obama, if you insist on “investing” in risky ventures, do it with your OWN MONEY for once!
Another stimulus-backed solar panel maker, one the president touted in a weekly radio address, lays off most of its workers. The definition of insanity is doing the same thing and expecting a different result.
President Obama is the Little Orphan Annie of presidents. He is always singing that the sun will come out tomorrow and shine on the American economy and his dreams of green energy. Yet companies such as Solyndra have proved the rule rather than the exception, producing more pink slips than green jobs as solar power and alternative energy continue to be eclipsed by advances in fossil fuel production.
The latest casualty is Abound Solar Manufacturing. The Longmont, Colo.-based recipient of a $400 million federal loan guarantee to expand solar panel production said Tuesday it is laying off 280 workers and delaying a new factory in Indiana. That amounts to a 70% reduction in its workforce.
The company says it’s merely restructuring. “We are facing tough market conditions and falling prices,” said Steve Abely, Abound’s chief financial officer, in remarks eerily reminiscent of Solyndra’s last will and financial testament.
Lost in the tap-dancing verbiage is the simple fact that solar power is not financially competitive without subsidies like Abound and Solyndra have received.